Corporate income tax:
New York State's maximum corporate franchise (income) tax rate for most corporate taxpayers is 7.1 percent; for qualified New York manufacturers the corporate franchise tax is 6.5 percent (3.25% for "eligible qualified NYS manufacturers").
Corporations pay the highest tax computed on the following four alternative bases:
1. A tax of 7.1 percent (6.5 percent for qualified NYS manufacturers; 3.25% for "eligible qualified NYS manufacturers") on allocated entire net income;
2. A tax of 0.15 percent on allocated business and investment capital (maximum for qualified NYS manufacturers: $350,000; maximum for non-manufacturers: $1 million;
3. A tax of 1.5 percent on allocated minimum taxable income (0.75% for "eligible qualified NYS manufacturers"); and
4. A separate minimum tax at fixed dollar amounts, ranging from $25 to $5,000, based on New York receipts.
An additional tax of 0.09 percent applies to a corporation's allocated subsidiary capital.
A surcharge rate of 17 percent also applies to a taxpayer's post-credit tax liability allocable to the 12-county Metropolitan Commuter Transportation District (MCTD). This includes the City of New York, Long Island, and the mid-to-lower Hudson River Valley.
Metropolitan Commuter Transportation Mobility Tax (MCTMT): Tax imposed on certain employers (those with calendar quarter payroll in excess of $312,500) and self-employed individuals (those with annual earnings in excess of $50,000) engaging in business within the Metropolitan Commuter Transportation District (MCTD), which includes New York City (the counties of New York (Manhattan), Bronx, Kings (Brooklyn), Queens, and Richmond (Staten Island)), and the counties of Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess, and Westchester. The MCTMT is imposed at rates from 0.11% to 0.34% of an employer's payroll expense for all covered employees for each calendar quarter. No exemptions or credits apply.
Sales and use taxes:
A 4 percent State sales tax (4.375 percent in New York City and the 12-county Metropolitan Commuter District) is levied on retail sales of tangible personal property and certain services, as well as on the use of such property and services upon which sales tax was not collected. The tax is based on receipts from retail sales. Furthermore, counties and cities may impose additional sales and use taxes up to an additional 4.75 percent.
Sales and use tax exemptions:
Exemptions from state and local sales and use taxes are provided for:
•Machinery and equipment used directly and predominantly in manufacturing, mining, and experimental research and development.
Manufacturing machinery and equipment, and fuels and utilities used or consumed in the manufacturing process.
• Tools used directly in manufacturing, mining, and refining.
• Commercial aircraft, machinery and equipment installed in such aircraft, personal property used in aircraft repairs, and certain aircraft equipment, and fuel sold to airlines.
• Repair, installation, and maintenance of manufacturing machinery and equipment, including parts, tools, and supplies.
• Wrapping and packaging materials when used in packaging/packing tangible personal property for sale.
All real property within the state is taxed at the local level. Property is assessed where located at a portion of the actual value by local assessors. Personal property is tax-exempt.
Industrial or commercial construction or reconstruction in designated areas of New York City may be exempt from real property taxes. Exemption rates and terms vary with the area and type of business facility.
Commercial and industrial facilities constructed or reconstructed outside New York City at a cost of more than $10,000 may be eligible for a partial exemption from local real property taxes. The maximum exemption amounts to 50 percent of any increase in value in the first year following completion and declines by five percentage points in each of the succeeding nine years.
Industrial or commercial facilities financed by industrial development agencies are exempt from property taxation. Negotiated payments in lieu of taxes can be made to municipalities.
Pollution-control facilities are exempt from local real property taxes and ad valorem levies on any increase in value resulting from the construction of such facilities.
Investment tax credit (ITC):
A credit equal to 5 percent of investment (up to $350 million; 4 percent rate on amount over $350 million and for personal income taxpayers) in buildings and tangible personal property, acquired by purchase, with a useful life of four years or more and used in production (manufacturing, processing, assembling, agriculture), financial services, qualified film production facilities, or research and development. The ITC is available at an optional rate of 9 percent (seven percent for personal income taxpayers) of qualified investment in research and development property. The ITC can reduce corporate tax to the higher of the alternative minimum tax or fixed dollar minimum tax. The ITC is taken in the year investment made or property placed in service. New businesses may take a refund of unused credit, and other unused credits may be carried forward 15 years (10 years for personal income taxpayers).
An additional credit for the same capital investment is available in each of the two years following the investment if employment in those years reaches specified levels. If employment is at least 101 percent of the base year level but less than 102 percent, the credit is 1.5 percent; at least 102 percent but less than 103 percent, two percent; and at least 103 percent, 2.5 percent. Unused credits may be carried forward for up to 15 years (10 years for personal income taxpayers).
Effective for property placed in service before October 1, 2015, the investment tax credit (ITC) is extended to tangible personal property principally used in the ordinary course of business: As a broker or dealer in connection with the purchase or sale (which shall include but not be limited to the issuance, entering into, assumption, offset, assignment, termination, or transfer) of stocks, bonds or other securities, or of commodities (as defined in the Internal Revenue Code
• Of providing investment advisory services for a regulated investment company (as defined in the IRC), or lending, loan arrangement, or loan origination services to customers in connection with the purchase or sale of securities
• As an exchange registered as a national securities exchange or a board of trade
Excelsior Jobs Program
The Excelsior Jobs Program, administered by Empire State Development (ESD), will provide job creation and investment incentives to firms in such targeted industries as biotechnology, pharmaceutical, high-tech, clean-technology, green technology, financial services, agriculture and manufacturing. Firms in these strategic industries that create and maintain new jobs or make significant financial investment may be eligible to apply for up to four new refundable tax credits. Businesses claim the credits over a five year period.
• The Excelsior Jobs Tax Credit: A credit equal to 6.85% of gross wages per new job to cover a portion of the associated payroll cost.
• The Excelsior Investment Tax Credit: Valued at two percent of qualified investments.
• The Excelsior Research and Development Tax Credit: A credit equal to 50 percent of the Federal Research and Development Credit, capped at 3% of R&D expenditures in NYS.
• The Excelsior Real Property Tax Credit: Available to firms locating in certain distressed areas and to firms in targeted industries that meet higher employment and investment thresholds (Regionally Significant Project).
Economic Transformation Program
The Economic Transformation Program, administered by Empire State Development, provides tax credits for projects that leverage investments to create jobs and support economic development initiatives in areas affected by the closure of certain correctional and juvenile justice facilities.
New businesses in targeted industries that create at least five net new jobs may qualify for up to five new, fully refundable tax benefits:
a jobs tax credit of 6.85% of the wages of each net new job;
an investment tax credit of 6% of capital investments with the credit increasing to 10% if it is at the site of a closed facility (credit capped at $4 million per firm for investments outside a facility and $8 million for all investments at the facility).
A 5-year real property tax credit: For firms outside a facility, the real property tax credit is 25% of eligible property taxes in the first year, phasing down to 5% in year 5; The credit is 50% of eligible property taxes for firms located at the facility phasing down to 10% in year 5;
A job training tax credit of 50% of training expenses, capped at $4,000 per eligible employee per year (Eligibility for this credit is limited to instances where former facility employees are hired by a new firm); and
a sales tax refund on tangible personal property used for construction at an eligible site.
Empire State Jobs Retention Program
The Empire State Jobs Retention Program Credit is a refundable tax credit available to for-profit, non-service provider businesses damaged physically and economically by an emergency as declared by the Governor on or after January 1, 2011. The Program is administered by the Department of Economic Development.
In order to participate in the program, a business entity described above must:
be located in a county in which an emergency has been declared by the Governor on or after January 1, 2011;
demonstrate substantial physical damage and economic harm resulting from the event leading to the emergency declaration by the Governor; and,
have had at least 100 full-time equivalent jobs in the county in which an emergency has been declared by the Governor on the day immediately preceding the day on
which the event leading to the emergency declaration by the Governor occurred, and must retain or exceed that number of jobs in New York State; and
must apply to the Department of Economic Development within 180 days of the declaration of emergency (or 180 days from enactment of this provision, if later) and be approved as a participant.
A participant may claim tax benefits commencing in the first taxable year that the business enterprise receives a certificate of tax credit or the first taxable year listed on its preliminary schedule of benefits, whichever is later.
The credit is equal to 6.85% of the gross wages paid for the "impacted jobs," and is available for 10 consecutive years.
"Impacted jobs" are defined as jobs existing at a business enterprise at a location(s) within the county declared an emergency by the Governor on the day immediately preceding the day on which the event leading to the emergency declaration by the Governor occurred.
The credit is available for tax years beginning on/after January 1, 2012.
New York Youth Works Tax Credit Program
Administered by the NYS Department of Labor, the New York Youth Works Tax Credit Program provides tax incentives to employers for employing at-risk youths in part-time and full-time positions in 2012 and 2013 (up to $25 million of tax credits may be allocated under this program).
Qualified employers certified by the Labor Commissioner are entitled to a refundable tax credit equal to:
$500 per month for up to 6 months for each qualified employee the employer employs in a full time job, or $250 per month for up to 6 months for each qualified employee employed in a part-time job of at least 20 hours per week (this portion of the credit is allowed for the tax year beginning on/after January 1, 2012 and before January 1, 2013); and,
$1,000 for each qualified employee who is employed for at least an additional 6 months by the qualified employer, or $500 for each qualified employee who is employed for at least an additional 6 months by the qualified employer in a part-time job of at least 20 hours per week (this portion of the credit is allowed for the tax year beginning on/after January 1, 2012 and before January 1, 2013).
Qualified employee means an individual:
Who is between the age of 16 and 24;
Who resides in a city with a population of 62,000 or more, or a town with a population of 480,000 or more;
Who is low-income or at-risk, as those terms are defined by the Commissioner; and
Who will be working for the qualified employer in a full-time or part-time position that pays wages equivalent to the wages paid for similar jobs (with adjustments for experience and training) and for which no other employer has been terminated, or where the employer has not otherwise reduced its workforce by involuntary terminations with the intention of filling the vacancy by creating a new hire.
Brownfield redevelopment credit:
Three refundable credits are available to taxpayers that have executed a "Brownfield Cleanup Agreement" with the Department of Environmental Conservation and have received a remediation certificate pursuant to such agreement.
• Brownfield Redevelopment Credit - consists of the sum of the site preparation costs, tangible property costs, and on-site groundwater remediation costs.
For qualified sites admitted to the Brownfield Cleanup Program on/after June 23, 2008:
•the tangible property credit component is capped at:
o $35 million, or three times the costs included in the calculation of the site preparation credit component and the on-site groundwater remediation credit component, whichever is less; or
o $45 million, or six times the costs included in the calculation of the site preparation credit component and the on-site groundwater remediation credit component, whichever is less, in the case of a qualified site to be used primarily for manufacturing activities.
•the applicable percentages, up to a maximum of 50 percent, for purposes of calculating the site preparation credit component and the on-site groundwater remediation credit component are based on the level of cleanup achieved, as follows:
- soil cleanup for unrestricted use, the protection of groundwater or the protection of ecological resources, the applicable percentage shall be 50 percent;
- soil cleanup for residential use, the applicable percentage shall be 40 percent, except for Track 4 which shall be 25 percent;
- soil cleanup for commercial use, the applicable percentage shall be 33 percent, except for Track 4 which shall be 25 percent;
- soil cleanup for industrial use, the applicable percentage shall be 27 percent, except for Track 4 which shall be 22 percent.
• Remediated Brownfield Credit for Property Taxes - The amount of the credit against the taxpayer's income tax increases based upon the number of persons employed at the qualified site and is generally equal to 25 percent of the product of the "employment number factor" and the eligible property taxes paid. If the property is located in an Environmental Zone, the credit is not subject to the 25 percent limitation.
• Environmental Remediation Insurance Credit - For premiums paid for environmental remediation insurance, up to the lesser of $30,000 or 50 percent of the cost of premiums.
A credit is available for employers who employ individuals with disabilities. The credit equals 35 percent of the first $6,000 of first-year wages paid to the disabled employee (maximum of $2,100 per employee). However, if the first-year wages qualify for the federal work opportunity tax credit, the New York credit will apply to the second-year wages.
Research/Emerging Technologies Credits:
Research and development credit: A credit of 9 percent against the corporation franchise tax (or 7 percent against the personal income tax) is available for investment in property used for research and development in the experimental or laboratory sense.
Qualified Emerging Technology Employment Credit: A refundable credit of $1,000 per new full-time employee (employees in excess of 100 percent of base year employment level) is available for one three-year period (the year the credit is first claimed and in each of the next two years provided minimum employment levels are maintained).
Qualified Emerging Technology Company Capital Tax Credit:
An investors may be allowed a credit equal to a percentage of each qualified investment in a qualified emerging technology company certified by the Commissioner of Taxation and Finance as follows:
• Ten percent of qualified investments, provided the taxpayer certifies that it will not be sold, transferred, traded, or disposed of during the four years following the year in which the credit is first claimed; or
• Twenty percent of qualified investments, provided the taxpayer certifies that it will not be sold, transferred, traded or disposed of during the nine years following the year in which the credit is first claimed.
Investments made by or on behalf of an owner of the business, including but not limited to a stockholder, partner or sole proprietor, or any related person, are not eligible for this credit. The total amount of the credit allowable to a taxpayer for all years, taken in the aggregate, cannot exceed $150,000 (at the 10 percent rate) and $300,000 (at the 20 percent rate). The use of the credit is limited to 50 percent of the tax otherwise due; unused credits can be carried forward indefinitely (no refund provision). The program provides for the recapture of a pro rata share of the credit in the event the qualified investment is not held for the requisite period.
Biofuel Production Credit
A credit is available for biofuel produced at a biofuel plant in New York State on or after January 1, 2006. The credit is equal to 15-cents-per gallon after the production of the first 40,000 gallons per year presented to market. The credit is capped at $2.5 million per entity, per taxable year, for up to no more than four consecutive taxable years per biofuel plant.
Empire State Film Production Credit - A refundable credit against corporate franchise (income) tax and personal income tax for qualified film production companies, or sole proprietors of qualified film production companies.
- The credit is the product of 30 percent and the qualified production costs paid or incurred in the production of a qualified film, provided that at least 75% of the production costs ("stagework") are spent in New York State.
- The credit is allowed for the taxable year in which the production of such qualified film is completed.
- "Qualified Film" excludes documentary films, news or current events programs, interview or talk programs, game shows, award ceremonies, sports programming, soap operas, commercials, music videos, or "reality" programs.
- $420 million ("Additional pool 2") has been allocated for this credit for each of years 2010-2014.
- Credits are paid as follows:
•Credits for less than $1 million will be paid in full in State fiscal year 2009-10;
•Credits between $1-$5 million will be paid out 50 percent in each of State fiscal years 2009-10 and 2010-11;
•Credits greater than $5 million will be paid out in 33 percent increments in each of State fiscal years 2009-10, 2010-11, and 2011-12.
•Credit is available for tax years ending on/before December 31, 2014.
• New York City is authorized to allow this credit against NYC tax; NYC credit is 5 percent of qualified production costs; NYC program capped at $12.5 million per year.
Empire State Film Post Production Credit - Up to $7 million of the Empire State Film Production Credit must be made available annually for this new credit, which will be allocated by the Governor's Office of Motion Picture and Television Development in the same manner as the Empire State Film Production Credit.
•Credit is equal to 10 percent of qualified post-production costs, available to a qualified film production company, (unless such company is eligible for the Empire State Film Production Credit).
•To be eligible, qualified post-production costs at a qualified post production facility must meet or exceed 75 percent of the total post production costs at any post production facility.
•Note: Any qualified post production costs used by a taxpayer as the basis for this credit cannot be used by the taxpayer to claim any other credit.
•Credit is 50 percent refundable in year 1, with the remainder carried forward to the immediately succeeding taxable year, where any remaining unused credit is refundable in that year.
Investment Tax Credit for Qualified Film Production Facilities - The ITC is available for property principally used as a qualified film production facility (i.e., a film production facility in the State which contains at least one sound stage with a minimum of 7,000 square feet of contiguous production space) among that eligible for the investment tax credit (ITC), where the taxpayer (owner of the facility) is providing three or more services to any qualified film production company (an entity principally engaged in the production of a qualified film and which controls the qualified film during production) using the facility, including such services as: studio lighting grid; lighting and grip equipment; multi-line phone service; broadband information technology access; industrial scale electrical capacity; food services; security services; and heating, ventilation and air conditioning.
Credit for Rehabilitation of Historic Properties - A credit is allowed for the rehabilitation of depreciable historic properties located in New York State. Note: to be eligible for the credit, the rehabilitation project must be in a distressed area.
•The amount of the credit is equal to 100 percent (30 percent, effective 1/1/2015) of the federal credit under IRC section 47(c)(3).
•A certified historic structure is defined as a building and its structural components which are listed in the National Register of Historic Places or located in a registered historic district and certified to be of historic significance to the district.
•Credit is capped at $5 million ($100,000, effective 1/1/2015); any State credit must be recaptured if the federal credit upon which it is based is subject to recapture.
•Unused credits can be carried forward indefinitely.
• In the case of partnerships or S-corporations, the maximum credit is determined at the entity (rather than taxpayer) level. The credit may be used to reduce tax to the higher of the alternative minimum income tax or fixed dollar minimum tax; unused credits can be carried forward.
Long-term care insurance credit:
A credit is allowed for long-term care insurance premiums paid during the taxable year equal to 20 percent of the premium paid for long-term care insurance. The credit may not reduce the tax below the AMT or fixed dollar minimum. Unused credits can be carried forward indefinitely.
Automated external defibrillator credit:
A credit may be taken for the purchase of automated external defibrillators, such as those used for first-aid treatment of heart attacks. The credit is equal to the cost of each defibrillator purchased, but may not exceed $500 per unit. Credit cannot reduce tax below the AMT or fixed dollar minimum. Unused credits cannot be carried forward.
Security Training Tax Credit:
This is a refundable tax credit, administered by the State Office of Homeland Security in conjunction with the Tax Department, for qualified building owners. Taxpayers must apply to the State Office of Homeland Security for an allocation of credit and credit certification in order to claim this credit. The credit is equal to the sum of the number of qualified security officers providing protection to a building(s) owned by the taxpayer multiplied by $3,000.
New York State Contact:
Empire State Development
633 Third Avenue, 37th Floor
New York, NY 10017
Incentive and tax information is provided to Area Development by each state's economic development or commerce agency for information purposes only and is subject to revision at any time by the state government. Please contact the state agency directly for full requirements and offerings.